County leaders seek fairer funding commitment from new PM for ‘underfunded and overburdened councils’

More than 30 leaders of England’s largest councils have written an open letter to the Telegraph urging the Prime Minister to see through his promise to ‘level up’ funding for the country’s ‘left behind’ places, with shire county areas missing out on £3.2bn of funding per year compared to other parts of the country.

The letter comes following the early pledges of the new Prime Minister focused on levelling up funding in areas such as schools and infrastructure, with fears raised by council leaders that previous government pledges to provide ‘fairer funding’ for rural and shire county councils were facing uncertainty.

BBC’s Radio 4 Today programme covered the letter this morning – you can listen to it here.

Those councillors, who lead local authorities within the County Councils Network (CCN) and whose councils represent 25 million people, are calling on the government to provide emergency funding for local services next year, and a ‘cast iron’ commitment to implement fairer funding reforms from 2021.

Due to historically lower funding and deeper cuts to core grants, local councils in England’s rural and shire counties are the lowest funded upper-tier authorities; receiving just £240 per person for public services such as social care, children’s social services, public health, bin collections and libraries – this is 60% less compared to residents in inner London receive (£601) and 46% less compared to councils in metropolitan and city authorities (£419)

New analysis from the CCN reveals that if the 36 councils that make up the network were funded at the same per person average in England, they would be receiving an additional £3.2bn per year.

In the letter, senior councillors warn that ‘if the Prime Minister is to fulfil his pledge to level up opportunity in this country, then we must have a cast iron commitment to fair funding for our underfunded and overburdened councils’.

County leaders say unfair funding has contributed to a ‘perverse’ situation whereby some councils can keep council tax rates as low as half what residents in counties are being charged yearly – alongside giving them a greater ability to protect and invest in vital public services. The average county Band D household’s yearly bill is £1,826, compared to £755 in some parts of London.

In the full letter sent to the Telegraph, the 33 council leaders say ‘for decades our historic shire counties have been left behind our major cities and urban areas’.

The previous government had pledged to seek to re-address the balance in funding between different areas and had been reviewing the ways councils are currently funded through the ‘Fair Funding Review’. This was introduced following intense lobbying by county authorities and their MPs following deeper cuts to council services in these areas over the past four years.

The proposals from the review were due to be implemented from next April. CCN had welcomed initial proposals set out by the Ministry of Housing, Communities, and Local Government, led by Rishi Sunak MP who has since moved to the Treasury as Chief Secretary.

However, there is uncertainty as to whether the review will take forward these proposals – and when. Following the announcement there would only be a one-year spending review, county leaders say they will accept a short delay to a new funding system being introduced in return for a ‘cast-iron’ commitment from the new government that it will conclude and implement the review – and provide an emergency injection of additional funding next year.

Even if county local authorities received no further cuts next year and raised their council tax by 3%, these 36 councils would face a £2.1bn funding black hole next year. Over the next five years, these councils face a total funding gap of £11.2bn; nine times greater than councils in the capital.

Unless the new Government provides additional resources and a commitment to fairer funding, CCN warn that they will have to cut back on frontline care services, repairs to potholes, streetlights and youth and sure start centres. They also say that they will have no choice but to continue raising council tax in years to come to make up the funding shortfall.

The letter concludes: “If the Prime Minister is to fulfil his pledge to level up opportunity in this country, then we must have a cast iron commitment to fair funding for our underfunded and overburdened councils.

“Boris Johnson knows from his time as London Mayor how the capital benefitted from more generous funding; enabling him to invest its infrastructure and local services, while cutting council tax.

“It is time our shire counties were given the same opportunities.”

Notes to editor

CCN is the national voice for England’s county councils. It represents all 26 county councils and 10 county unitary authorities in the country. Collectively, they represent 25 million people, or 47% of the country’s population. It is a special interest group of the Local Government Association.

The 2019/20 per head figures for different types of councils are based on general grant funding to councils, plus retained business rates as well as the public health grant, and all social care grants.

For two-tier areas, district and county funding were combined. Population data used is mid-year 2016 data.

The £3.2bn figure is derived by uplifting all CCN member councils per head funding to a national average of £363 per head.

The funding gap figures are derived from PriceWaterhouseCoopers (PwC) report an independent Review of Local Government Spending Need & Funding (May 2019), commissioned by the CCN. It can be downloaded here.